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1. [2] Using CAPM, show that ratio of the risk premiums on two assets is equal to ratio of their s. 2. [5] You have

1. [2] Using CAPM, show that ratio of the risk premiums on two assets is equal to ratio of their s. 2. [5] You have $100,000 to invest in a portfolio containing stock X and stock Y. Your goal is to create a portfolio that has an expected return of 12.1%. If stock X has an expected return of 10.28% and a beta of 1.2, and stock Y has an expected return of 7.52% and a beta of 0.80, how much money will you invest in stock Y? How do you interpret your answer? What is the beta of your portfolio

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